Thursday, August 26, 2010

Wah Seong falls to more than 11-week low

KUALA LUMPUR: Shares of pipe-coating specialist Wah Seong Corp Bhd fell to an 11-week low low of RM2.14 in late afternoon as selling pressure picked up following the disappointing 2Q ended June 30 results.

At 3.30pm, it was down 16 sen to RM2.14 with 1.6 million shares done, the lowest since June 8.

However, the 30-stock FBM KLCI was higher, up 4.19 points to 1,401.26.

Wah Seong recorded operating losses of RM6.44 million as it was affected by a decline in contracts in 2009 compared with operating profit of RM55.27 million in the previous corresponding quarter ended June 30, 2009,

Its revenue fell 33% to RM369.74 million from RM551.84 million.'' Pre-tax loss was RM3.74 million compared with pre-tax profit of RM47.37 million. But at net profit level it posted earnings of RM1.7 million, a contrast from the RM29.73 million a year ago

OSK Research said Wah Seong's 1HFY10 results were below expectations due to the slower revenue generation across all its division and the delay in the commencement of some of the pipe coating jobs.

However, the research house expected a better 2H10 for the company, coming mainly from its pipe coating division as well as engineering division to some extent.

OSK Research had downgraded the stock to Neutral. Its target price was reduced to RM2.40 (previously RM2.71) based on the existing PER of 14 times FY11 earnings following our FY11 earnings downgrade. To-date, the company is still supported by its orderbook of RM1.2 billion.

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